Avid Bioservices Inc (CDMO) 2008 Q4 法說會逐字稿

Hello this is the (inaudible) operator. Welcome to the Peregrine Pharmaceuticals fourth-quarter 2008 financial results conference call. All participants will be in a listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. (OPERATOR INSTRUCTIONS) For your information, this conference is being recorded. I would like to turn the call over now Miss Barbara Lindheim. Miss Lindheim?

Good morning and thank you for joining us on today's call with management of Peregrine Pharmaceuticals. We're here today with Peregrine's President and Chief Executive Officer, Steven King; and Chief Financial Officer, Paul Lytle, to discuss the Company's results for fiscal year 2008 reported this morning. Before I turn the call over to Steve, I would like to read the cautionary note regarding forward-looking statements.

This conference may include statements that are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Peregrine Pharmaceuticals current views about future events and financial performance.

These forward-looking statements are identified by the use of terms and phrases such as believes, expects, plans, anticipates, on target and similar expressions identifying forward-looking statements. These factors include but are not limited to the risk factors detailed from time to time in Peregrine Pharmaceuticals filings with the Securities and Exchange Commission including but not limited to the Annual Report on Form 10-K for the year ended April 30, 2008.

Investors should not rely on forward-looking statements because they're subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from Peregrine Pharmaceuticals expectations. Peregrine Pharmaceuticals expressly does not undertake any duty to update forward-looking statements whether as result of new information, future events or otherwise. I would like now to turn the call over to Steven King. Steve, you may begin.

Thank you Barbara. I would like to start by thanking everyone who is participating in today's fiscal year 2008 year-end conference call. I will start with a brief recap of developments since our last conference call. Paul will then go over the financial highlights for the fiscal year and I will conclude with a more detailed review of our accomplishments which will be followed by a question-and-answer session.

The past few months have been an extremely busy time at Peregrine. Since our last quarterly conference call, we completed enrollment in the initial set of patients inour Phase II study testing bavituximab in combination with docetaxel in breast cancer patients and reported promising early results from the study.

In addition, we initiated patient enrollment in a second Phase II study testing bavituximab in combination with carboplatin and paclitaxel in patients with lung cancer and are poised to begin a third Phase II study in the next few weeks. In addition to these clinical developments, we had our first ASCO presentation for the bavituximab cancer program at the 2008 annual meeting. Needless to say, it was an exciting few months for the bavituximab cancer program that has set the stage for an even more exciting end of the coming year.

While moving the cancer program forward, we had an equally exciting few months for the bavituximab antiviral program. We continued to move forward with our HCV HIV coinfection Phase I trial and just a couple weeks ago announced that we had entered into a contract with the Defense Threat Reduction Agency or DTRA to evaluate and develop bavituximab in a human equivalent antibody for the treatment of viral hemorrhagic fever virus infections.

This contract, potentially worth over $44 million over a five-year period, is a tremendous outside validation for the Company and in particular for the bavituximab antiviral program. In addition to these bavituximab developments, we have continued to be active in our Cotara clinical program including a presentation at the ASCO 2008 annual meeting. And we have continued our activities in our research collaborations on the antiviral front.

In addition to advancing our product development efforts, positive momentum is also apparent at our Avid Bioservices unit which as Paul will discuss, has been successful in significantly increasing its revenues and in attracting new revenue generating services including the recent agreements to become the first US preferred vendor for a highly regarded proprietary antibody production system. I will now turn the call over to Paul and will come back later to discuss our clinical and development progress in greater detail. Paul?

Thank you Steve. Thank you Barbara and thank you everyone for joining us. Early this morning, we released our financial results for fiscal year 2008. This earnings release outlines the financial results in greater detail and includes financial tables. So I encourage everyone to read the entire release. We also plan to file our Form 10-K later today and both of these documents will be available on our website.

Now during the next few minutes I will walk you through our financial results for fiscal year 2008. I'll then briefly discuss our financial position and we will conclude with a discussion of two other important topics. Now let me begin with the financial results for fiscal year 2008 starting with revenues.

Total revenues for the year ended April 30, 2008 were up 64% of to $6.1 million compared to total revenues of $3.7 million reported last fiscal year. This increase was mostly driven by increased revenues coming from third-party customers of Avid Bioservices, our wholly-owned contract manufacturing business.

Last year, we projected record revenues for Avid in fiscal year 2008 and we achieved that goal. We are now projecting another record year for Avid in fiscal year 2009. Our revenue projections for Avid in fiscal year 2009 are expected to be in excess of $10 million based on current signed contracts from third-party customers. This is in addition to the important manufacturing services Avid provides Peregrine in supporting our three ongoing clinical programs.

If you were to value those Avid services provided to Peregrine in fiscal year 2008 valued at market rates, it would equate to over $6 million in additional revenues to Avid. But since Avid is a wholly-owned subsidiary, these intercompany revenues are eliminated in financial consolidation. These numbers just reemphasize the value Avid provides to Peregrine.

Now let me turn to expenses. Total cost and expenses increased to $30.2 million for the current fiscal year. This compares to total cost and expenses of $25.6 million reported in the same prior year period. This increase of $4.6 million was primarily related to an increase in research and development costs as we continue to advance our three clinical programs combined with an expected increase in the cost of contract manufacturing directly related to higher reported revenues from Avid.

In addition, we saw an increase in SG&A expenses in the current year of $704,000. This increase partly reflects our increased investment in business development including the expansion of our business development team and our enhanced partnering efforts. Now let me turn to the bottom line.

For fiscal year 2008 Peregrine reported a net loss of approximately $23.2 million or $0.10 per basic and diluted share. This compares to a net loss of approximately $20.8 million or $0.11 per basic and diluted share in the same prior year period.

This increase in our net loss was mostly related to our increased investment in research and development of $2.4 million as previously discussed. Steve will discuss our R&D progress in more detail later in the call. Now let me shift your attention to the balance sheet.

We ended the fiscal year with approximately $15.1 million in cash and cash equivalents at April 30, 2008. This compares to $16 million in cash and cash equivalents reported at our last fiscal year-end April 30, 2007. Now let me conclude with two additional important points.

As I stated on the last call in March, our goal was to (inaudible) as little as capital as possible to enable us to reach the next major inflection point in our clinical trial programs. I believe we have achieved that goal as a result of our ability to grow our projected Avid revenues in fiscal year 2009 based on our current backlog for services as well as from the projected funding from the recently signed multi-year government contract. And we believe accomplishing this goal will without tapping into the equity markets has been especially important in view of the current depressed market conditions.

Now based our current financial projections, we believe we have sufficient cash on hand when combined with our anticipated cash inflows from Avid's business, again based on signed contracts, and from the anticipated cash inflows from the recently signed DTRA contract to operate our business through at least fiscal year 2009 based on our current planned operations.

Although this is good and we feel confident about our likely cash inflows from these contracts, there are potential uncertainties associated with all financial projections that limits our auditor's ability to rely on these future cash inflows. Even though these revenue generating contracts are signed, our projected cash inflows have not been counted towards our future operations in accordance with auditing standards. Therefore, it's these potential uncertainties that caused our auditors to issue an audit opinion with a going concern qualification.

Let me state that this opinion has no impact on our current operations nor our NASDAQ listing. So instead of raising extremely dilutive capital through a pipe transaction or a registered direct transaction before the filing of the 10-K, we decided to accept this qualified opinion and rely upon our anticipated cash inflows from the growing business of Avid and the newly awarded government contract to move our business forward. We believe this was the right decision for the Company and the right decision for shareholders.

That being said, we have been actively seeking to raise additional capital through non-dilutive structures such as a term loan or similar debt structures. Although we'll have to repay this debt, we believe if we are successful in negotiating a debt transaction, this funding could provide an extended (inaudible) of capital as we continue to advance our programs.

In addition to the debt financing, we continue to pursue opportunities that could monetize our Avid business. We're projecting record revenues in fiscal year 2009 and as revenues increase, the valuation of that business should likewise increase. It's important to note that while we are actively pursuing ways to monetize this asset, we're seeking to do so in a way that protects the manufacturing needs of both of our clients and the needs of Peregrine.

Monetizing our Avid asset continues to be a great opportunity and we will continue to pursue this potential transaction under the right terms. The next topic I would like to address pertains to our continued listing on NASDAQ.

Let me first say that we have announced some of the most significant developments at the Company a few weeks ago including the multi-year government contract award for up to $44.4 million and the encouraging results from our bavituximab Phase II breast cancer study showing that 14 of the 14 evaluable patients have achieved stable disease or better. That being said, the market price of our stock remains relatively unchanged.

As I stated on the last earnings call in March, our closing bid price needed to be $1 or higher for 10 consecutive trading days by July 21 in order to regain compliance with NASDAQ's $1 minimum bid price rule. If you count back the ten trading days from July 21, we needed to be above $1 starting July 8.

Even with some of the best news in the Company's history, our stock price did not reach that mark. So the question is what is next? Let me discuss our next steps and some new encouraging developments we have learned from NASDAQ.

These next steps are basically a process we plan to follow to maintain our NASDAQ listing. Let me explain the process in detail so you will be aware of what is happening as we move through the process to regain NASDAQ compliance.

First, we expect a de-listing notice from NASDAQ on or about July 22. At that point, we will issue a press release announcing the receipt of the NASDAQ notice. Don't be alarmed by this. Our stock will continue to be listed and traded as normal. This is a normal part of the process.

Second, we will appeal that decision within the seven calendar days and request a hearing from NASDAQ. Again, our stock will continue to be listed and traded as normal during this time.

Third, we will have a hearing with NASDAQ that generally occurs within 30 to 45 calendar days from our request date. At that meeting, we will present a definitive plan that we believe will enable us to achieve and sustain long-term compliance. Again, our stock will continue to be listed and traded as normal during this time.

Fourth, I have some encouraging new information. Per a discussion with our NASDAQ listing qualifications analyst, there has been a very recent shift in philosophy at NASDAQ. Previously, the hearing panel at NASDAQ was fairly adamant that a noncompliant Company needed to resolve its deficiency within a very short period of time and exceptions were rarely awarded. Per our recent discussions with them, the philosophy at NASDAQ has now been modified perhaps in response to the poor market conditions that are taking a toll on so many NASDAQ listed companies.

NASDAQ's new philosophy is to provide companies with the maximum discretion under the current regulations to regain compliance assuming a Company has a valid definitive plan in place. In essence, the maximum discretion under the regulations should provide us an additional 180-day period or until mid-January 2009 to regain compliance. And again, NASDAQ has told us that our stock will continue to be listed and traded as normal during this time.

Now that being said, a definitive plan to regain compliance with the minimum bid price deficiency must include a plan for a reverse stock split. This is in case the price of our stock does not track to any future potential milestones that may be achieved.

Therefore, if required at that time, we will ask shareholders to approve a reverse stock split at the next annual meeting with the intent to utilize this mechanism if necessary at the Board's discretion. If the Company is able to regain compliance without implementing a reverse stock split, it is the Board's current intention not to effect a reverse split.

We believe this is good news for shareholders and provides some additional time to achieve NASDAQ compliance in the normal course of business. I would like to thank you for your time and your attention. This concludes our discussion of the financial results. Steve will now continue to update everyone on the Company's recent achievements and our major objectives for the upcoming months. Steve?

Thank you Paul. I will now go into a little more detail on the clinical and research highlights I mentioned earlier. I would like to start with the bavituximab oncology program.

We have built considerable momentum for the program over the last few months and are very happy with the promising early data coming out of the Phase II trials. The highlight of the past few months was achieving and surpassing the prespecified primary end point in stage one of our ongoing Phase II clinical trial, testing bavituximab in combination with chemotherapy drug docetaxel in patients with advanced breast cancer.

This opens the door for expanding the trial to include an additional 31 patients. I would like to go through the early results of the study in a little more detail. This Phase II study is a two-stage trial testing bavituximab in combination with docetaxel in advanced breast cancer patients. 14 of the 15 patients enrolled in stage one were deemed to be evaluable for tumor response and up to this point, none of the patients have shown any signs of tumor growth with the first patients in the study now out over five months.

In addition, at the first eight-week evaluation point, still early in the study, seven of the 14 evaluable patients had already achieved objective tumor response -- a positive sign of activity that surpassed the predefined end point for expanding the study into the second stage of patients. Patients from stage one are continuing to receive treatment along with continuing assessments of their tumor response and we look forward to sharing more data from the study as patient treatment and follow-up continues.

A second positive development for the bavituximab cancer program was the recent initiation of patient dosing in a Phase II trial designed to evaluate the safety and efficacy of bavituximab in combination with chemotherapy agents, carboplatin and paclitaxel, in patients with non-small cell lung cancer, the leading cause of cancer deaths in the US. The primary objective of the study is to assess the overall tumor response rate and so far the trial has proceeded very nicely. In fact, we were able to treat several patients in just the first week the trial was opened.

A third Phase II study testing the same combination in breast cancer patients is set to begin shortly. Taken together, these Phase II studies are setting the stage for a potentially very exciting rest of the year on the clinical front. Now onto the bavituximab antiviral program.

We recently announced a significant development in our bavituximab antiviral program with the award of a five-year contract potentially worth over $44 million to test and develop bavituximab and a fully human equivalent as potential broad spectrum agents for the treatment of viral hemorrhagic fever infections. The contract covers testing and development efforts totaling up to $22.3 million over the initial 24-month base period with $5 million available immediately, and the remainder expected to be appropriated over the rest of the two-year base period.

The contract can be extended beyond the base period to cover up to the $44.4 million in funding over the five-year contract period. Work with the contract literally began the day it was signed and we have already had a start-up meeting with representatives of the DTRA and other groups that will be involved in overseeing the contract. It took countless hours of work on behalf of ourselves and the DTRA to finalize the contract and this is an exciting opportunity to work with the DTRA to develop bavituximab and its human equivalent as agents to potentially fight life-threatening diseases that we otherwise would not have been able to pursue.

Equally significant is the fact that this program dovetails so nicely with our ongoing efforts to develop bavituximab for the treatment of HCV virus infections. This contract represents non-dilutive capital that supports work which will be directly beneficial for all of our bavituximab development programs and in return, we will continue to generate data from our ongoing trials and preclinical research that will help guide and support the use of bavituximab for the potential treatment of hemorrhagic fever virus infections -- truly a potential win-win opportunity for both us and the DTRA.

In addition to initiating the DTRA contract, we have also continued our preclinical corporations with researchers at Duke and other institutions involved in evaluating our anti-PS platform for use in the possible prevention and treatment of HIV infections. While we had hoped to have data related to the collaboration publicly available by now, the delay has been caused by an expansion of the collaboration and the generation of additional data that only makes the story potentially more interesting.

There are currently more than 40 scientists and nine institutions involved in the collaboration. While I cannot share more at this time, I look forward to being able to update you on these activities in the not-so-distant future. While moving these collaborations forward, we have continued to make progress in our ongoing multi-center trial of bavituximab in HCV/HIV coinfected patients. While there is not much of an update at this time, I can say that we're happy with results we've seen to date and that we remain enthusiastic about this study and that we look forward to providing an update at an appropriate time in the future.

Next, I would like to turn to our Cotara brain cancer program. Over the past few months, we've strengthened the foundation for progress in the Cotara clinical program by initiating additional sites in our two ongoing trials with Cotara in patients with GBM. While patient enrollment until recently has been modest, we're now seeing an increased number of patients screened and treated as a result of expanding the number of clinical sites in these trials.

We will continue to closely monitor progress on the trials and to take additional steps as necessary to speed patient enrollment. The highlights of the Cotara program over the past few months was a presentation at the 2008 ASCO annual meeting reinforcing Cotara's safety and its ability to target radiation precisely to the tumor while avoiding healthy organs. The data demonstrated that the concentration of Cotara in brain tumors was at least 100-fold higher than in healthy organs, further reinforcing its potential in the treatment of GBM, the most deadly and aggressive type of brain cancer.

These positive data validate a key principle underlying the Cotara program confirming its abilities to specifically concentrate a high dose of radiation in tumors. Even more than the validation of Cotara's targeting potential, we are encouraged by the fact that all patients in the cohort presented at ASCO live longer than the expected median survival time for GBM patients at first relapse. We look forward to updating you on further advancements in the Cotara clinical program as more data becomes available later this year.

On the corporate side, the biggest advancement in our business operations has been the growth of Avid as a contract manufacturing business. While Avid has always been and continues to be a major strategic asset for Peregrine and its clinical programs, we see tremendous potential in growing the business.

This year, we project Avid to be a profitable, stand-alone business while providing services to Peregrine. The group at Avid has responded to the challenge and I can say that manufacturing and associated activities at Avid are currently by far at the highest levels we have ever experienced.

This growth at Avid has not come at the expense of Peregrine's programs but rather has enhanced the quality of service. Peregrine is of course still a primary anchor client and all of our needs just like our other clients are being addressed extremely well. We look forward to updating you on further advancements (inaudible) Avid as the business continues to grow.

On the business side, interest in our bavituximab and the Cotara clinical programs from potential partners remains strong and the level of interest has increased as a result of the data we are generating on the clinical front. We're confident that a steady flow of upcoming data from our clinical and preclinical programs will lead to significant licensing opportunities.

Before opening the floor to questions, I want to note that Peregrine management appreciates that our current depressed stock price and threat of NASDAQ de-listing are very difficult on shareholders. We ourselves are shareholders and we share your frustration.

While it would be easy to blame the current share price on the general market conditions and in particular the depressed small cap biotech market, I believe this just means that we have to work that much harder to overcome these additional challenges and achieve value creation. We will take the necessary steps to maintain our NASDAQ listing which is obviously critical to move forward.

As far as creating value for the Company, over the past few weeks we have in my opinion had the best news in the history of the Company including major outside validation in the form of the DTRA contract and promising clinical data. We need to build on this momentum in the form of further clinical data and outside validation supporting our programs. We've set the stage for more clinical data through our ongoing and upcoming Phase II studies.

And outside validation can come on several fronts -- from peer review publications, from technology partnering and from continued growth of our manufacturing revenues; all of which are within reach based on our current conditions at the Company and ongoing discussions. We are dedicated to making the Company successful and appreciates your continued support as we move forward. Operator, we're now ready to open the floor for questions.

(OPERATOR INSTRUCTIONS) Ren Benjamin, Rodman & Renshaw.

Good afternoon and thanks for taking the question. Actually I have several questions and maybe we could start off with one on the financial side. You mentioned having a plan ready for discussion at the hearing. You mentioned one particular item, a reverse split, to try to [address] and stay on the NASDAQ. Can you comment or talk about any other options you may have besides the reverse split?

At the NASDAQ hearing from my understanding, they want to understand your clinical programs, your goals, your future milestones that you plan to achieve which I think we have a very strong position in. And in addition they just want to make sure (inaudible) position that you do have a reverse stock split in place or available to you through either a upcoming shareholder meeting or an existing shareholder meeting that you can address the minimum bid deficiency at the point in time when it is necessary.

Okay great.

And the remainder of the continued listing requirements, we easily meet or exceed all of the other standards from the NASDAQ capital market standpoint.

Terrific, thanks for the clarification. On the clinical side, if we -- just starting off with bavituximab and the oncology program on the docetaxel trial, can you tell me what sort of patients are being treated here? You mentioned advanced breast cancer patients but are they docetaxel refractory or how should we characterize them?

No, patients in the study have not received prior docetaxel treatment. They are refractive to (inaudible) therapy and this is front-line metastatic treatment.

Front-line metastatic. So what sort of response rate would you expect with docetaxel alone?

In the study we based our study on, docetaxel had a response rate of about 30%. And in that study which was an avastin study, they saw the combination of avastin plus docetaxel with about a 50% response rate.

And that's overall response rates including (inaudible)?

That is the objective response rate so that would be partial responses or complete responses.

Got it. Okay. Regarding the non-small cell lung cancer study, can you talk to us a little bit about when we might see -- when the enrollment might complete and when we might see data and just a little bit of information on the trial design?

Yes, a little bit on the trial design first I guess. This is a two-stage what's known as a (inaudible) two-stage trial design. In the initial set of patients we will be treating up to 21 patients. If we see suitable response rates which have been predefined, then we would move onto an additional set of 28 patients for a total 49. The patient population is at relapse.

As far as enrollment goes, we're extremely happy with the way the trial has started enrollments. I mentioned earlier we had several patients actually enrolled in the study even just during the first week and we're still kind of bringing the number of clinical sites up to full speed. I would anticipate probably in the September timeframe would be our goal to have completed the enrollment phase of the study. I think if we can continue with the momentum we've already had early in the study that's certainly achievable.

Then at that point we'll just be waiting for the eight-week scans to come through and be able to update on that. So I would anticipate really as far as some enrollment updates including entry into the other breast cancer study we're going to run and then being able to throughout the fall then have follow-up data both from the docetaxel study as well as the carboplatin paclitaxel studies.

Do you know at what conferences these data might be presented at or will it be more in line with let's say, press releases? How do you envision the data coming out?

We are certainly trying to identify some good high-profile meetings for the docetaxel study because that will be a little more mature and we will have some of the actual response data to talk about. So we're really shooting for those this fall. That would be our preferred method of getting the news out there because it obviously updates our shareholders but also the medical community in general which is one of our goals for the program.

Sure, okay. Moving onto bavituximab in infectious disease, it's just more a question regarding the contract that you just signed and were awarded and congratulations on that. What is the potential for stockpiling here or is there a mechanism involved for potential stockpiling or is it completely just a research based contract?

This contract really covers research and development efforts so included in that is of course the animal testing and in vitro testing that would lead to validation of the potential for this drug in viral hemorrhagic fever infections. As far as stockpiling, well first of all, the second is on the development front it covers activities such as scale-up of production, formulation studies.

So a lot of the activities that are part of this overall contract will be performed by Avid Bioservices just as it would any other outside contract. As far as stockpiling goes, that would be part of a procurement by the government so this current contract does not anticipated stockpiling material but rather developing the methods for producing large amounts of material which then could be stockpiled by the government if we are successful.

Okay, great. And then just when might we see updated data from the Cotara program?

You're probably looking at the fall. We are as I mentioned earlier, patient enrollment was somewhat slower than we really had hoped when we started the trial. We do now have the trial up to kind of full speed, if you will. We are continuing to enroll patients. I would expect this fall we should be able to have an update on kind of how the trial is going, how enrollment is going as well as how the patients are doing on study.

Will it be fair to say that the [AACR] or URTC meeting would be a timeframe to take a look at?

Yes, absolutely. That would be one of our nice targets.

Terrific, great. Thank you very much for answering the questions.

Richard Siragusa, Merrill Lynch.

Okay, I think you mentioned on the DTRA, did you mention that $22 million would come in in the the first 2.5 years?

Yes, the base period for the contract is two years so that $22.3 million is essentially budgeted for the first two years of the contract.

And then secondly, you also mentioned that the reason for the delay in the Duke paper was that they're gathering additional data which would make hopefully the results even more exciting. How long will it take to gather that additional data?

I mean, I know the work is ongoing. Essentially the work needed for the initial publication and presentations has pretty much been completed. There is a little bit of polish-up work going but again these delays are overall a real positive for the program because what we're finding I think is even more exciting than what we originally had hoped going into the end of the studies.

And in fact our effort here internally has probably tripled over the course of the collaboration and the number of outside investigators working with us on the trials -- on the studies has also greatly increased. So there is a lot of excitement around what we're doing here, what we're finding and the potential applications of that knowledge base that we're gathering right now.

So the additional data has been gathered then?

Yes, some of it has. It's obviously an ongoing process so the more we learn, the more we get to do research. But as far as the initial publications and what have you, the data is essentially available now. There are publications that are in process and others that have been submitted and so things really are moving along very nicely.

[Michael Jacobs], private investor.

Given in your own words the superior news that's come out recently particularly the military news and the results from trials, obviously every shareholder is deeply concerned with the stock price. There seems to be very poor indeed information going out to the shareholders in terms of promotions (inaudible) investor relations. What do you intend to do about that? Do you intend in fact to change the course that you're on, get a new PR/IR firm involved that can do the job and if not why not?

Well, I guess probably the best step here would be to maybe bring Barbara Lindheim back online and since she is very actively involved in really talking to the media and promoting what we're doing to the media in an effort to raise greater awareness for the Company and its technologies. So, Barbara, if you are available maybe you can jump back on and address this shareholder's questions?

Yes, I hope you all can hear me. Thank you for that question. I think it's a good opportunity for us to clarify some of what we think is the very good work we've been doing working with Peregrine management.

First of all let me start off by saying that in the biotechnology trade and professional and investor media, we have been getting excellent coverage. For instance on the DTRA announcement, we had a major front page story in Bioworld Today which is the most respected and widely read biotechnology trade publication that is read worldwide by investors and had a tremendous story there. We also had coverage in the more general media by Dow Jones Newswire, by Thomson Reuters. Certainly we were picked up and coverage in quite a few of the online publications that are tracked by private investors such as Briefing.com.

So when we kind of look over the overall landscape on that news, we think we did very nicely. One thing unfortunately in terms of the general media I think as you may all remember several years ago there was a great deal of interest in the general media about the issue of bioterrorism. Unfortunately, the media goes in fashions as everything else does and in fact if you get on Google or Yahoo! search and do a search you'll find there's been virtually no media coverage amongst the general media of bioterrorism related issues in at least a year and a half to two years time.

So although I think we did a nice job in raising awareness amongst some of the general media about this being another feather in Peregrine's cap for them to keep an eye on the Company as we have positive developments, right now with $4 per gallon gas and the turmoil in the financial markets, this is just not an issue that's resonating right now with the media. In terms of the cancer data we think they're very exciting data. But I think we also have to be realistic as Steve mentioned.

These are our first data. They're 14 patients. We did certainly get the word out also. We've got very nice pickup of those early data amongst the professional trade and biotech investor press and we also made an effort and I think had some success in getting the word out to the general media that Peregrine and bavituximab are absolutely compounds that folks want to watch. It's important to realize that building a media presence is a process. It doesn't happen overnight and we feel that these first results from the study in Georgia were a very important foundation that we will be able to build on and generate some more widespread media coverage around as we generate more data over the coming months.

Well, I appreciate your comments but the fact is that this stock is not only languishing but it's going down with the news that's coming out. I recognize that there's a very bad market out there, nobody is questioning that. But companies that have this kind of news in the pharmaceutical industry travel at 10 times what we're traveling at and we are now at the point we may even get knocked off of NASDAQ. So I think the change is necessary.

I will turn the call back over to Steve and Paul, but I think we would challenge your data. This has been a very, very tough market for small cap biotech companies across the board. We expect this attrition to be temporary and I will turn the call back to management.

I think just to follow-up on those points there is from a Company standpoint, we have to continue our efforts to generate additional data that is going to be supportive of the potential of our technologies. As that data -- again, I think as Barbara pointed out, this is early results -- very promising early results -- but early results nevertheless. I think as the data matures, we get more patient data, we get these other trials going through, have data coming (inaudible) through that then certainly the news flow and the potential I would think interest from a PR standpoint is certainly going to only be increasing over time here.

I think as we do in all areas of our business, we will evaluate putting more effort into these areas as we feel we can hit more outlets and have more opportunities to be successful. We do take this very seriously. Again, we're shareholders as well and we want to see the stock price move in the same direction you do.

(inaudible) you have the next question. Is your phone on mute, sir?

Can hear me?

Yes sir.

Thanks for taking my call. I've got a two-part question. It seems like over the next few months here it could be the best of times or the worst of times for Peregrine. I've been involved with the Company for over ten years and as a lot of individual shareholders and I'm sure everyone involved were not happy with the way things have turned out to a point. Over the next several months it seems like you're going to be very busy with the bavituximab program and Cotara and so on and I know we have a couple of other, let's say, clinical assets -- the VEA and the VTA.

One, are you going to be doing anything with them? And two, if you're not or even if you are but you're not going to be able to do much with them; one, would it be worth your while to dispose of those assets; one, before they become obsolete; or two, before they become worthless like (inaudible)? And then I have another question if you want to answer that part first.

Well what I can say is we're looking at partnering opportunities for the preclinical programs. Clearly our resources are currently earmarked to be as aggressive as we can on the clinical front. On the research side obviously the DTRA money coming through is a big boost for the bavituximab antiviral program.

But as far as VEA and VTAs go, we do have active discussions on those programs. There's a lot of interest in them and we certainly as you said don't want to see them become stale on the shelf. We want to really see those moving forward. Again, those discussions are ongoing. I'm very hopeful we can bring some of those to a quick conclusion and just see the technologies moving forward while we continue to generate the clinical data that is probably the nearest-term major value driver for the Company.

My next question and I'm sure this is on the mind of a lot of other individual shareholders, I've got a major chunk of my finances invested in this Company. A reverse split would be decimating to me. Rather than going that route, would be better to accept maybe what you would consider less than a desirable partnership or selling off of some of our assets where we would probably come out ahead at least from an individual shareholder viewpoint rather than a reverse split?

Well I think the issues you bring up are a little bit hard to address. Essentially, I think the Company is in a really good position should we have to move the route of a reverse split. We're not moving in this direction and our stock price isn't depressed because we have had major failures and the Company just has nothing going for it.

In contrast, I think we are in a much better position than we ever have been with regard to our development programs. The programs we're developing are in very hot areas and clearly targeted therapies in oncology especially are really the way of the future. I think that's the reason why we have had so much interest in the program from potential partners.

We certainly don't want to sell the Company or anything in it for pennies on the dollar when we feel like the future is so bright for the Company. So, I'm not sure how to address could we sell off this or that. Bottom line is I think the most valuable assets for the Company are only growing in value and that's something we want to take advantage of.

We recognize we need to turn that into value from a share price standpoint. And again, the ways to do that is more clinical data in addition to further outside validations. That may be very well partnering some of these programs but again we don't want to give them away just to get deals done or to try to extract some quick value here. I still believe what we're doing has tremendous upside and that if we stay the course here we will be successful.

Thank you. This concludes today's question-and-answer session. I will now turn the conference back over to Mr. Steven King. Mr. King?

I want to tank you all for participating in today's conference call and for your continuing support of Peregrine. We look forward to reporting on our continuing progress at the next quarterly conference call. Thank you again.

Thank you. This concludes today's event.